DMITRY VASILIEV: THE GOAL OF RUSSIAN REGULATORS IS TO IMPLEMENT BENCHMARKS IN TARIFF REGULATION WITH THE PROSPECTS OF THEIR LONG-TERM USE

Head of FAS Department for Regulating the Electric Power Industry made a report at the meeting of ERRA Chairs – Energy Regulators Regional Associations

On 11 October 2018, the annual meeting of ERRA Chairs - Energy Regulators Regional Associationstook place in Antalya (Turkey). Head of FAS Department for Regulating the Electric Power Industry, Dmitry Vasiliev, took part in the event.

The Associations included the Czech Republic and Austria as full-fledged members in the club of international regulators by general voting of its members.

A representative of Austrian regulator described in detail the structure of Austrian energy market and clearly outlined the specifics of integration with adjacent markets and implementing of the current rules of energy resources trading with near-border partner-countries.

The main session discussed the most pressing issues facing regulators under the modern trends associated with the “green” energy sector, international competition between countries when markets are integrated and search for new points of balance and development.

ERRA representatives specially considered developing energy markets, the consequences of price liberalization, advantages and shortcoming of different market models and structures, as well as the regulator roles in the dynamically changing environment. More detailed attention was paid to experience of building energy markets and the results of reforms in Turkey, Macedonia, Mexico, Bosnia & Herzegovina, Saudi Arabia and Nigeria. Participants shared opinions and observations.

There were also vivid discussions in two Working Groups on licensing and competition as well as tariff and pricing.

The key items on the agenda were changes in the European Union, the so-called “winder” energy package and its impact upon market players and competition, the mechanism to support renewable energy sources, cybersecurity, and protection of information systems, regulating electrical networks and planning their development. Discussions covered, in particular, long-term methods of forecasting demand and the electric grid infrastructure under global challenges as well as the role of regulators and their current and forthcoming tasks.

“The current objective of Russian regulator is to implement benchmarks in tariff regulation with the prospect of their long-term use”, stated Dmitry Vasiliev. “We have already positive experience of applying benchmarks, now the mechanisms should be tuned for use in other spheres of regulation. We mean, first of all, the power grid”.

Head of FAS Department for Regulating the Electric Power Industry added that benchmark regulation in the electric power transmission sector can generate the best long-term result, which will reduce actual costs of companies, increase  performance efficiency, changed management approaches and create saving incentives, reduce the risks of unreasonable “tariff” discrimination and regional differentiation.

“We continue studying international experience in this area, analyze approaches of other regulators and are devising our own solution that we will present in the near future”, concluded Head of FAS Department for Regulating the Electric Power Industry.

In his view, regulated entities with new management philosophy will emerge, oriented to long-term results and systemic costs optimization. Such management implies sustainable use of resources when forecasting operational and capital investments, simultaneously accounting for all customer needs.